How to Negotiate Your Salary Like a Pro
One of our readers who goes by the name L wrote to us over the weekend asking if and how they should negotiate their salary, and that they want everyone’s input.
Since we have so much to say about this, and since they want as much input as they can get from everyone else, we thought we should make this into a case study and turn our answer into a full-blown post and publish it here.
This is the actual question we got from L:
“Thanks to a lot of financial blogs like yours and ESI money, I really started paying attention to my career management. I have a question and would appreciate everyone’s input.
Today I was told I’m getting a promotion (retroactively in effect from 1 Oct). I have received a 10% raise (previous merit + ~6.5% title raise). I’m wondering if I should negotiate this.
I did look on Glassdoor and the offer seems to be on the lower side (however I do know this is can really vary but it should not so much) – almost lower by 16% of the average (for the new title) or so if my math is right!
When my manager was telling me about this today I didn’t think it was the correct place to talk about the financial aspect.
Note that we use Workday for the compensation/financial/HR software and I assume I will just see an update in title/compensation there directly (no email or anything else) in a few days.
I want to add that getting a promotion for me is a big deal considering how political things have been here. Also note that I’m actively looking for new jobs (and also hoping to switch to a different role so it has been challenging).
Any thoughts and suggestions on how I can tactfully negotiate? Has anyone reached out to HR directly or spoken to their manager about such a thing?
I want to make sure my manager is part of the discussion and I don’t like the idea of going to HR directly. Thanks!
First and foremost, congratulations for getting a promotion!!! That’s a big accomplishment worth a celebration.
The short answer to the question
For the raise, the short answer is Yes, negotiate, negotiate and negotiate! There’s no other option 😊.
The long answer to the question
Note that we have also reached out to other personal finance bloggers including ESI Money, also one of L’s favorite personal finance bloggers. You will see their advice below at the end of the article.
Here are our recommended steps to take:
Research the salaries
Good to hear that you are already using some advice we have given in our post about How We Increased Our Annual Income From $0 to $160K to $400K+, and that you have done some research already on Glassdoor.com as we always recommend.
But don’t just check out the average salaries, because you are NOT average. Average people don’t tend to get promoted.
Check what the top 10%, 5% and 1% are making for your specific new tittle. What the 1% are making will give you an idea what should be your 1st counter-offer.
This will allow you to leave room for negotiation, because the employer will probably also counter-offer.
Research the competitors
What are the competitors paying? How does your company rank? Is the company generous, average or cheap compared to others in the same industry?
If your employer is average or cheap, it’s time to get serious about jumping ships. There’s nothing worse like working for a company that does not know how to appreciate their employees. Try shooting for the top 2 best paying employers.
Research the new title
Is it a real promotion or a lateral promotion? Will the new tittle make your resume look better? Some promotions might be paying more, but they might make your resume look bad. For example, the new position might be in the field that you are not interested in.
You mentioned you are actively looking for new jobs and also hoping to switch to a different role. Will the position help you achieve your long-term vision or will it slow down/hinder to your progress?
Research your company’s salary range for the new tittle/band level
If you don’t know your company’s salary range for the new title/band level, find it. Now! Some companies are opened about salary ranges, others are secretive.
Go to your company’s intranet or the Employee handbook and see if salary ranges are published. If they are not published, contact HR and ask for them.
You asked if you should involve HR. This is the area where you can involve them.
If HR won’t give you the information, try to see if you can get the information from your colleagues who are already in that band level.
Research other benefits you might be interested in
Are you interested in more stock options, a bigger bonus, more PTO (paid time off), more health benefits, tuition reimbursements, flexible work arrangements such as working from home or other?
Are they negotiable or are they standard where everyone gets the same?
Research the new department/manager
Are you changing departments/managers? You mentioned there’s a lot of politics going on around. What is the political environment in the new department?
What’s the turnover rate? Do the employees over there tend to stay or leave the department/company?
Does the new department/manager allow flexible work arrangements? Sometimes a company will allow flexible work arrangements but the department boss might not allow it.
Is the new manager a micro-manager or will she/he give you the freedom to do your own thing?
Knowing all this information, will give you an idea how much risk you are taking and how much money you should be asking to compensate for the risks.
Figure out the budget if you can
Do you have access to the department or project budget? It’s not only accountants that have access to such information. Managers, project managers, project leads, team leads might have access to that info.
If you have access, see how much room they have. It will give you an idea how much the company/department will be willing to negotiate.
Gather your accomplishments
Make sure you have a list of your accomplishments ready. We recommend to have at least 10 accomplishments. It’s not abnormal for us to have a list of 30-40 accomplishments.
You might wonder, how you can come up with such a long list. It’s actually very easy. You just have to make sure to track your accomplishments in real time.
Don’t wait to track your accomplishments at the end of the year or once a year during review time.
Track them every day, or at least once a week. Every time, you come up with an idea, track it, implement it, and track the progress at least on a weekly basis.
Before you know it, you will have too many accomplishments, and your biggest problem will be deciding which ones to mention, and which ones to leave out.
Also keeping track of your accomplishments, makes it easier to keep your resume up to date especially since you are actively looking for other jobs.
We recommend listing at least your top 5 accomplishments for each tittle on your resume.
Make sure to quantify them if you can. Eg: Saved the company $10M by doing XYZ. Or Increased sales by 60% from $5M to $8M. Or Completed project on time and under budget by $5M …
Don’t worry about going over the arbitrary 2-page resume limit. Our resumes are as long as 4 pages, and we have never had a problem getting interviews or getting hired.
Put together a 90-day plan
Are you familiar with the new role and areas that need an improvement? Put together a 90-day plan of what you plan to do and accomplish.
We always recommend reading the book The First 90 Days. This book will help you WOW your boss the first day, week, month, quarter, …
Check out other resources that we recommend that have helped us get where we are.
Practice, Practice and Practice
Practice the conversation you are going to have with your manager. Practice in front of a mirror, or a friend, or your spouse, even practice in your head.
There are a few good videos on Youtube that can help such as this one:
Schedule a 1:1 meeting with your manager
Schedule a 1:1 meeting with your manager as soon as you can. The sooner you do it, the better. You want to start the conversation before the salary and tittle are official. Hopefully you have not signed the offer yet?
Time to negotiate
During the 1:1 meeting tell your manager that you would like to discuss the new position, salary, and transition.
Tell him/her you had time to think about the offer, and that you really appreciate the opportunity and the confidence they have placed in you by promoting you.
Tell her/him that you have done some research, and that you think $x, is what’s fair. Show them your long, intimidating 😊 list of accomplishments and give them the 90-day plan for the new role if you have it.
Wait for their response.
If you are lucky, they will accept the counter-offer right away. But this rarely ever happens.
They are most likely going to tell you that they will think about it.
Tell them that you appreciate them taking time to think about it.
Once the meeting is over, send an email/counter-offer letter reiterating your counter-offer, and make sure to include your accomplishments and the 90-day plan.
Wait for their response….
Again, if you are lucky, they will accept the counter-offer. But this rarely ever happens.
They are most likely to come back with their own counter-offer, or a no.
In either case, don’t just accept. Thank them again for taking time to review your counter-offer and give them your second counter offer.
Reiterate your previous points, and add some more data: The band level range, and salary research you conducted online.
But avoid mentioning the average numbers, because you are not looking for an average salary. You are looking for the top 10, 5, 1%.
Wait for their response….
There’s a good chance that they will accept your new counter-offer.
If they come back with a no, and stick to their first or second offer, accept or reject especially it’s a lateral promotion or a promotion that doesn’t excite you much.
But definitively accept, if it’s a real promotion that will help you advance in your career, look good on your resume and/or excites you.
We suggest counter-offering no more than twice. Less than 2 counter-offers may be leaving money on the table, but too many counter-offers can offend and frustrate the employer, and we don’t want to do that. Unless you have an outside job already secured.
You should always negotiate as you have nothing to lose but everything to gain by negotiating. You are most likely to get more than what was offered to you at first.
But even if you end up with more than what they had offered, it might not be enough. It might still be lower than what you could get if you switched companies.
Thus, make sure you continue looking for other jobs outside the company. Jumping ships, can get you a 25%, 50%…raise.
Good luck and report back and let us know how it went. We are rooting for you!
What other personal finance bloggers had to say
We reached out to a few other personal finance bloggers and this is what they had to say:
Slow Dad says: “The first step is figuring out what your time is genuinely worth. Be honest with yourself here. After that it is a case of putting that figure to your current employer.
They’ll either meet it, or they won’t. It will largely depend on whether they need you more than you need them. If they meet it then great, take the promotion and carry on doing business with each other.
If they won’t then your current employer does not value you as much as you believe you are worth. That tells you everything you need to know.
If your current employer won’t meet your price then you need to be prepared to take your bat and ball elsewhere.
Providing you have set your market value realistically, then you will readily be able to find alternative employers who will pay that figure to utilize your services.
Don’t forget to factor in fringe benefits like flexible working hours, being able to work from home, and so on into the equation.
Trading a few dollars for the ability to manage your own time is often a trade worth making.
Ultimately you want to choose the option that will make you happy, the rest is just detail.
KiwiandKeweenaw says: “Negotiating (like quitting) is awkward, but remember this is part of a manager’s job. And while it is nerve-wracking and personal for you, it is business for your manager and company.
I recommend L is well versed in the facts and typical salary for their new position (Glassdoor). Then be consider non- monetary aspects to negotiate.
Would you rather have an extra week of vacation, telecommuting, or a sabbatical in the next year?
The company will likely counter with a small bonus, since that’s what impacts their bottom line the least. Best of luck L, be prepared, and know your bottom line!”
There you have it folks.
What do y’all think? Did we miss anything? What are your opinions on how many counter-offers can you make without leaving money on the table and at the same time without offending or frustrating the employer?
Any other advice you would like to give L and other readers in the same situation? They want as much input as they can get. Give them some words of wisdom, encouragement and send them some good vibes.
Do you have a career or finance related question, that you would like us to help you with? Contact us through comments or contact form, and we will make sure to respond and maybe even turn it into a case-study.
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Do you want to learn more about us? If so, you can also read these other posts:
- About us
- How We Increased Our Annual Income From $0 to $160K to $400K+
- How we live on 15% of our income
- Joining the Million Dollar Club/Challenge and So Can You
- How To Pay Off A Mortgage In 5 Years
- Our Biggest Money Fight and 9 Lessons Learned
- Our 6 Financial Mistakes and 15 Lessons Learned
- How I Paid Off My $40,000 Student Loans Before Graduating
- The resumes that bring in $400,000+/year (Samples Provided)